Discover Financial Services is responding to a growing trend to give consumers greater flexibility to choose the services they want with a new online tool called CardBuilder, which enables card applicants to set card terms based on preference.
“We’re always trying to find new ways of attracting and acquiring new customers, and offering CardBuilder is thematic with what consumers want right now, that they can personalize their product and they have a product that works for them,” says Anas Osman, Discover vice president of acquisition. “Rather than continue to predict what consumers want, we thought it would be good idea to have consumers tell us what they want.”
Consumers who want to apply for a Discover card can access the tool through Discover’s Cardbuilder.com Web site. They begin by selecting the option that best describes their credit standing and how they plan to manage their account balances. Discover uses this information to help identify the best offer available for the applicant. From there, applicants may choose to customize their card based on the best rate deal, rewards program and card image.
To choose the best deal, the site guides applicants by providing options after clicking a “See More Terms” button, or they may choose “Create Your Own Terms” to pick the introductory purchase annual percentage rate, the post-introductory purchase percentage rate and balance-transfer percentage rate.
If they select “See More Terms,” the site asks applicants to choose which is more important to them: low introductory rate, long introductory rate, low purchase interest rate, low balance-transfer rate or long balance-transfer rate. An interactive chart then displays the best offers based on those selections. Under “Create Your Own Terms,” applicants can manipulate levers associated with the terms and see other tradeoffs for their selections. For example, if the purchase interest rate is increased, the other rates may change to show the tradeoff, says Osman.
Applicants may choose from 28 popular card designs, and they may choose the type of rewards they earn when using the card. Choices include receiving Discover’s 5% Cashback Bonus, airline miles or getting interest payments back for paying on time through the Pay-On-Time Bonus offering.
Enabling consumers the option to pick their reward type should be especially appealing to applicants, Adil Moussa, analyst at Boston-based Aite Group, tells PaymentsSource. “Rewards have always been a big deal in card issuing, and it is what really attracts cardholders initially,” he says. “Giving consumers a choice of rewards is definitely going to play a factor in the adoption of the Discover product.”
Discover is not using national brand advertising to promote CardBuilder but will point to it in its regular marketing efforts online and in direct mail, Osman says.
Megan Bramlette, managing associate at Auriemma Consulting Group, says not only is Discover’s CardBuilder tool a good move to cater to consumer demands, but it also satisfies some requirements of the Credit Card Accountability, Responsibility and Disclosure Act, which asks for more transparency with credit card agreements. “It’s more the spirit of the act, to provide clear descriptions of what the issuer obligations are in terms of rates and fees,” she says. “The tool gives customers ample opportunity to understand what they are getting into when signing a card agreement.”
Discover’s Osman, however, says the card brand did not create the tool to satisfy CARD Act requirements. “The CARD Act has been on our minds, and everyone is thinking through how to react to it,” he says. “But [developing this tool] was a separate platform and coincidental, and it happens to work to Discover’s benefit.”
Discover is not the first issuer to offer flexible terms. Capital One Financial Corp., for example, has been promoting a similar product called CardLab for several years. Besides rates, the issuer also enables cardholders to select their own picture for their card.
Cap One representatives did not to respond to requests for more details and comment.
